The Tortoise vs. Hare Approach To Business

tortoiseandhareWe all know the online world moves fast. Ideas can be spread in an instant. Technology changes seem to happen in the blink of an eye, and many have come to expect all aspects of business to move and grow at that same rapid pace. Sometimes no matter how fast technology moves, other meaningful growth in business still does (and should) take its sweet time.

I had a recent client with a very small start up consumer product company. The brand has a website with online shopping, a Facebook page and a Twitter profile. Tiny sales and a tiny following is what they had. But that’s ok, because they were just starting. I was hired to do some outreach work to promote the brand online. I got to work and started getting some good response online to the product. Buzz was starting. People began to enthusiastically talk online about the product. Traffic to the company’s site was starting to increase. Their Facebook and Twitter interactions increased. And yes, their sales increased a little bit too. I was feeling pretty good about what I had started for my client.

But in a short period of one month, they decided to abandon the outreach simply because it didn’t result in a huge increase in immediate sales. Although sales did increase as a direct result of the online campaign, it wasn’t immediate enough and it wasn’t huge enough by their standards. I tried to explain to them that the campaign was an investment in brand building and brand awareness. I told them that brand building is a process that happens over time, which leads to measurable increases in sales further down the road. I told them that there will be incremental growth, but to expect instantaneous explosive growth is unrealistic. Slower growth is longer lasting and more meaningful. I told them that they were a new brand that no one had heard of yet. They needed to spend some time, get their name out there, get to know their customers and build some excitement and online talk, then they would begin to see some more significant sales in return.

They couldn’t wrap their minds around that. They saw their dollars go out and expected them to double back in instantly in sales. Brand awareness cannot often be measured directly in sales, especially in the initial stages of a start up. Brand building (which in SM terms is essentially the same as relationship building) takes time. You wouldn’t expect to go out on a first date and be married by the second. Brands need to court their customers a while before they’ll go steady or even consider marriage.

I am right there with the tortoise. I believe a slow and steady pace will lead to more meaningful and long-lasting growth. We all dream of instant success. Wouldn’t that make life easier? But it is rare for a brand to find overnight success and it’s even more rare for those that do to be more than a flash in the pan.

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Toms Shoes: The Big Business of Being Good

Bad boys are no longer in style, and it looks like being good is the new black. Many companies are now incorporating feel good, do good deeds directly into the culture of their business models. It’s not an afterthought. It’s the core foundation built right into the structure of the business from the get-go. Businesses obviously have been “giving back” for years – that’s not new. But what is new is the trend of making the giving back itself the business model, in some cases superseding the importance of product that is being sold. This is called Social Entrepreneurship.

Deeds that were once left in the hands of the non-profit sector, now have spread their wings and landed in the for-profit arena. Some savvy entrepreneurs are now realizing that harnessing the power of doing good can make for a nice profit, an undeniably positive brand image, a loyal customer base, unlimited PR opportunities, and last but not least, charity.

Companies like Terracycle and GotBooks.com are following this basic model, but one company that seems to be mastering it is Toms Shoes. Toms is a company founded by Blake Mycoskie in 2006. Blake is in the business of making and selling shoes, but ironically, the product that his company produces and sells is secondary to what his company does.

While traveling on a polo vacation in Argentina, he noticed that the impoverished village adjacent to the polo field was filled with children who were all running around barefoot. Because these children did not have shoes, they were not allowed to attend school and they were susceptible to various diseases that could be picked up from the ground. On his way flying back home from his vacation, Blake decided that he would start a company that would make shoes, sell shoes and give one pair away to needy children for every pair sold. He calls it the “One for One Movement.” This is all very good. He is doing a good thing by helping needy children, I will definitely not argue with that. But don’t forget, he is in the business of making money too.

I’ve been in the shoe business, so I have a pretty good sense about the cost of shoes. Toms Shoes retail for $48. Knowing approximately what shoes of this type would cost to manufacture, I would estimate that in a typical retail scenario, these shoes should retail for about 1/2 of what Toms is charging. These are basic shoes, known as alpargatas or espadrilles. They are simply constructed out of inexpensive materials by low cost labor in Argentina, China and Ethiopia. There are other similarly constructed shoes on the market selling for about $20 – $24.

My point is that Toms charges about twice what would be expected for a shoe of this type in order for the consumer to pay for the additional pair that Toms gives away. Toms is technically giving shoes away, but seems to be passing on the cost of giving them away to the consumer, and even making a profit on the giveaway pair as well. The consumer really is the benefactor in this scenario, not Toms. Another way to look at it is that rather than Toms selling one pair and giving one away, the consumer is paying for two pair and getting one, so Toms can give a pair away at no cost to the company, and at a nice profit. Toms has also set up a non-profit wing of the company, not for the manufacturing of the shoes, but for soliciting and managing volunteers to distribute the shoes to the needy. The giveaway shoes are paid for by the consumer and distributed to the needy by volunteers. Toms Shoes is a for-profit business, so it seems to me that the distribution of the shoes should be paid for out of Toms’ pocket, not by the donated time of volunteers.

It’s a marketing thing, really. He’s doing some good, helping people, making a nice profit, and making consumers feel good by knowing they are helping shoeless children, and in turn doing some serious brand building. It is a win-win situation for everyone as long as the consumer doesn’t mind footing the bill for what Toms markets to be their own generosity. Don’t get me wrong, I have no problem with a business making a profit at all, and donating goods or services to the needy is absolutely a good thing, but Toms should acknowledge their consumers more directly as partners in their business model and in their generosity, rather than taking the sole credit for the giving. Blake does refer to himself as the Chief Shoe Giver, but it’s Toms’ consumers who are making the sacrifice out of their wallets, not him.

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Great Expectations: Brand Building and ROI

coin returnBrand building and the return on the investment it takes to build a brand are, to a great degree, difficult things to measure. They can be a bit elusive and hard to define. The measurement involves participation in and understanding of a process that takes place over time, utilizing and considering numerous variables and methods to create a sense of familiarity, awareness and trust in a product or brand name. *Note the phrase “over time.”

There are some seemingly lucky dogs that hit on an overnight success, but those instances are rare, and most often only have the appearance of overnight success. The behind the scenes relentless messaging, marketing, PR, promotion and brand building work that takes place is usually not visible to the naked eye. And it really shouldn’t be.

Patience is key here. Focusing too heavily on tangible and quick ROI, dollar for dollar is futile. Investing in a promotional campaign that sends traffic to your site, starts people talking on the internet and elsewhere about your brand, increasing your Google ranking, getting your brand more attention from other media and other venues, though it may not seem like a strong dollar for dollar return, one has to consider what awareness is worth. When does the dollar return come from a promotional investment? Maybe not for months or even longer. What will greater brand awareness lead to? Customer trust and loyalty, new business, and more sales, but it most likely will not be right away. To expect to pay a dollar for promotional work and the next day get two dollars back is unrealistic, but that oftentimes is the expectation when a client asks about ROI.

Data is useful, no doubt about that, but data can be deceiving. If a promotional campaign does not immediately and directly produce sales, but does drive traffic and produce positive awareness, is that considered to be a poor return on investment? I would argue that ROI doesn’t necessarily have to translate directly to dollars out vs. dollars back in. The return may not come in ways that can easily be counted. The return can come in ways that are impossible to measure. It can come from a positive consumer feeling about and recognition of a brand, trust in a product, understanding of and connection to what the brand stands for and what a company is all about. All of that has to come before many consumers will be willing to spend one penny to buy. How do you measure and value the various elements of ROI?

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Butter Your Bread With Innovation

breadnbutterThere often comes a time during the life of a company when the need for a new product smacks them in the face.  Maybe their current product line has reached the natural end of its life cycle and it’s time for an infusion of something new. Or maybe they are seeking to expand into a new market. This is when a fork in the road appears, and what path is taken can determine whether a company succeeds or fails.

Some brands choose the path of building their product line by shopping around and purchasing products already on the market for inspiration or in many cases, to directly knock off. Some brands, for fear of scaring existing customers away or because of insecurity, rely too heavily on focus groups, consumer input and data to determine product direction. Although keeping a finger on the pulse of the competition and consumers is important, it shouldn’t necessarily be used to dictate the direction of a new product. But there are other, perhaps braver brands that choose to take the path of innovation. These are the brands that most often end up being the leaders and the trend setters.

Originality and innovation are what makes a brand shine. True innovators are creatives who are always looking, not necessarily just at what the competition is doing, or listening only to what their existing customers are saying, but they are looking and listening to what the world in general is doing and saying across many industries and platforms. They are the ones who often do things in spite of what the competition is doing, rather than because of what the competition is doing. And if the formula is right, that innovation is what can turn into a company’s bread and butter.

A lack of innovation most often happens when companies get too big and cumbersome or overly secure and complacent or are too new and insecure. A lack of innovation happens when companies depend too much on data and focus groups or what the competition is doing rather than on what a truly talented creative team can invent. It also comes when the desire for what may seem like guaranteed money supersedes the desire for great product. But ironically, if you have great a product, the money will come and that great new product could turn into the new bread and butter for the company. Innovation doesn’t come from looking at what’s flying off the shelves today, it comes from an ability to imagine what will fly off the shelves tomorrow. Innovation doesn’t generally come from consumers. Consumers know what they have seen, what they have used, what they have bought before. They generally don’t imagine what doesn’t exist yet. That is where designers, inventors and visionaries come in. Innovative product and strong brand identity come from creativity, inventiveness, perception and innate intuition and bravery about what direction to go in or what to create.

The most successful companies are the ones that are able to strike that magic balance between maintaining a core product that sustains them (which had its roots in innovation) and being willing to take the greater risk that comes along with breaking the mold. Valuing and putting faith in the importance and abilities of a talented creative team can be the ticket to a brand’s long term success.

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5 Lessons In Life And Business From The Great Philosopher, Dr. Seuss

yertle
I truly believe that Dr. Seuss was a genius. He was a creative genius, writing stories full of rhyme and rhythm and when, if what he was trying to say wouldn’t naturally rhyme, he’d just make up a word that did. He broke all the rules of illustration, language, and content for children’s literature at a time when the standard fare in children’s books was Fun with Dick and Jane. His books are beyond just funny children’s stories; they always offer insights into human nature and society.

A fine example of this is Yertle the Turtle and Other Stories. This book was first published in 1950 and is still completely relevant today, not just as a children’s story, by as a philosophical and ethical guide for business and life. I’d even suggest that Yertle the Turtle should be required reading for all business school students and aspiring CEOs. If you haven’t read it or haven’t read it since you were 6, go out and buy a copy. It is a series of 3 stories that address the deadliest sins of life and business: greed, power, vanity, arrogance and ignorance. I think any of us in business know a couple of people that might benefit from reading this book. Here are a few things that we can learn from Seussian Philosophy:

1. Fear not. Stand up for yourself and your ideals. Speak up if you are being taken advantage of. Express yourself.
2. Respect and listen to those around you. I mean deep respect, not just saying please and thank you. Sometimes the best ideas and solutions come from unexpected sources. (Like a children’s book.)
3. Don’t let greed make you hungry for too much too fast. Strive to be driven by great ideas, great products or services, not just by fast money. Trying to grow too fast on the backs of others or before you are ready is a recipe for disaster. Let your business build naturally.
4. Don’t be seduced by visions of fame, notoriety or delusions of grandeur. Let your business speak for itself. True and honest promotion is so much more powerful than false endorsements by famous people (maybe with the one exception of Oprah).
5. Don’t be ignorant, or if you are, admit it. If there’s something you don’t know, don’t pretend you do. Don’t be let arrogance get in the way of seeking help. When in doubt, seek the advice or direction of an expert.

Creativity and ideas have driven me to take risks and do things that most cubicle dwellers wouldn’t dare dream about. I am a risk taker, as most entrepreneurs are. Sometimes it works and sometimes it doesn’t. But in the process, it’s important to stay true to who you are, where you’re going and what you hope to accomplish while doing some good along the way. There ARE good and decent business people out there. We should all strive to be one of them.

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Bigger is Better vs. Better is Better

I recently read a post on Seth Godin’s Blog that got me thinking about growth in business. He was talking about the concept of expanding a business in order to grow your market. But I think one of the biggest mistakes in business is to assume that expanding your business in whatever way, whether it’s tapping into a new market, expanding your distribution into untapped territories, or adding more product to your line, is the key to growth. These are all obvious methods to approach business growth, but are they the best methods?

Building a strong brand through a great name, great product, clear message, great service, being consistent in presenting your brand, making what you do the best it can be, and fully reaching your potential market is the key to growth. Once these elements have reached their peak, then seeking to expand through other avenues makes sense. I think a brand needs to develop, establish, perfect and mature before growth through expansion should even be considered. Growth through improvement comes first.

My point here is to first max out your opportunities to improve and grow on what your existing brand and customer base is before trying to expand into uncharted territory. Examine what your business does, how it operates, how it promotes, how it presents itself, and improve on the quality of all of those things first. Rapid premature expansion of a brand will end up watering it down. Expansion into areas outside of what is expected from your customers can confuse your identity. A business needs to look at what it does best and perfect and expand within that defined space, so consumers don’t get confused about who the brand is or what it offers. Ignoring the definition and innate strength of a brand and what that image means to customers in an effort to expand and grow, is a recipe for disaster. In our society, it’s often difficult to take things slow and to build on quality first rather than quantity. Gluttony is pretty unappealing. Bigger isn’t necessarily better, BETTER is better.

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